EUROPEAN EQUITY OPEN: Shares open higher amid a heavy slate of corporate earnings

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  OVERNIGHT: US indices were mixed after stale FOMC minutes (see here), while APAC stocks lacked firm direction amid holiday-thinned trading conditions, with Japan away for the Emperor's Birthday (see here).


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  EUROPEAN OPEN: European shares open higher on Thursday amid a heavy slate of corporate earnings updates, which we recap below. In the tech sector, US semiconductor Nvidia’s (NVDA) shares rose 8.9% post-earnings after topping expectations and announcing that it is moving faster to a “new business model” of selling AI services directly to large companies and governments; investors in SAP (SAP GY) will note that Nvidia's (NVDA) new cloud service will be offered through US peer Oracle (ORCL). There have also been a lot of updates in the industrials sector, where there are unconfirmed reports circulating that Qatar Holdings plans to sell 3mln shares in Vinci (DG FP) at around EUR 108.71/shr (vs EUR 109.14 close on Wednesday); in earnings, BAE Systems (BAE LN) profits rose on higher military spending, Rolls-Royce (RR/ LN) topped expectations with 57% rise in profits, Eiffage (FGR FP) is open to further raising its stake in Getlink (the latter’s earnings report saw record earnings, boosted by Eleclink and Eurotunnel traffic); while Fugro (FUR NA), Knorr-Bremse (KBX GY), Krones (KRN GY) topped expectations. In materials, Anglo American (AAL LN) sales and EPS top expectations, underlying EBITDA short; takes an impairment charge of USD 1.7bln in relation to Woodsmith. Elsewhere, in consumer focussed sectors, Luminar (LAZR) and Mercedes-Benz (MBG GY) announced an expanded partnership to enable fully automated driving for next-gen vehicles; Mercedes has also partnered with Google (GOOGL) to develop branded navigation for its new MB.OS operating system. French competition regulators say Electrolux (ELUXB SS) violated French antitrust rules. Pirelli (PIRC IM) reports strong results, see scope for higher sales in 2023. EssilorLuxottica (EL FP) sales rose 9% in the quarter, affirms FY22-25 revenue margin targets.

DAY AHEAD:

• Our live day ahead calendar can be accessed here; a PDF version can be accessed here.


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  EUROPEAN DATA/SPEAKERS: Final Eurozone inflation data is usually a non-event, but may garner more attention than usual given that Eurostat used an estimate of the German figures (on account of technical issues), which could result in a revision to the 8.5% Y/Y flash print (the consensus looks for 8.6% Y/Y). In the UK, CBI distributive trades are expected to increase to -13 from -23. In the EMFX complex, traders will note the CBRT rate decision, where the central bank are likely to cut its weekly repo rate by 50bps to 8.50%. The speaker’s docket has a distinct BoE focus, with hawk Catherine Mann to speak in wake of cooler than expected inflation data, along with better growth data, which gives the BoE more scope to hike if it chooses to. BoE’s Cunliffe (considered a dove) will also be speaking in the morning. The ECB's de Cos will deliver remarks in the afternoon.


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  NORTH AMERICAN DATA/SPEAKERS: The pre-market data dump will include a second look at US GDP in Q4 (expected to be confirmed at 2.9%), while there will be attention on the components, including core PCE prices (the core rate is likely to be confirmed at 3.9%). Weekly initial jobless claims, which coincides with the BLS’ establishment survey window, is expected to be little changed (200k vs 194k last week), while continuing claims are seen picking up a little to 1.7mln from 1.696mln. The pre-market data slate wraps up with the release of the Chicago Fed’s national activity index for January – other regional Fed surveys have been mixed, although the S&P Global PMI series surprised to the upside in flash February data.  The speaker’s slate includes 2024 voters Bostic and Daly. EMFX traders will take note of the Banxico’s meeting minutes; at the policy meeting, the central bank surprised with a larger than expected hike, but alluded to a smaller rate hike at its next meeting.


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  ENERGY: The DoE will publish weekly energy inventories; for reference, the API’s weekly equivalent reportedly showed crude stocks +9.9mln (exp. +2.1mln), Cushing inventories +0.5mln, gasoline +0.9mln (exp. +0.1mln), and distillates +1.4mln (exp. -1.1mln).


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  SUPPLY: Supply comes by way of USD 35bln 7yr notes from the US Treasury.


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  US CORPORATE EARNINGS: Today’s major corporate earnings include MRNA, KDP, AMT, INTU, BKNG. Our full US daily corporate earnings estimates can be accessed here.

STOCK SPECIFIC NEWS:

• Our full European equity specific briefings for February 23 can be accessed here and here.


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  EX-DIVS: AstraZeneca (AZN LN), GSK (GSK LN), Unilever (ULVR LN), Barclays (BARC LN), Standard Chartered (STAN LN), Land Securities Group (LAND LN), Endeavour Mining (EDV LN).


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  COMMUNICATIONS: Deutsche Telekom (DTE GY) reports higher profts, sees higher earnings in 2023. WPP (WPP LN) sees 3-5% growth in FY23. Telefonica (TEF SM) profits slip, but were a little above market expectations. Mediaset Espana (TL5 SM) profits slide. KPN (KPN NA) downgraded at Berenberg.


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  CONSUMER: Luminar (LAZR) and Mercedes-Benz (MBG GY) announced an expanded partnership to enable fully automated driving for next-gen vehicles; Mercedes has also partnered with Google (GOOGL) to develop branded navigation for its new MB.OS operating system. French competition regulators say Electrolux (ELUXB SS) violated French antitrust rules. Pirelli (PIRC IM) reports strong results, see scope for higher sales in 2023. Auto1 (AG1 GY) sales miss expectations, but it is targeting adj. EBITDA breakeven. NH Hotel (NHH SM) returns to profits.


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  ENERGY: Eni (ENI IM) net profit more than doubled in FY22, though were still slightly short of estimates. John Wood (WG/ LN) confirmed it has received three takeover proposals by Apollo Global Management (APO) which board rejected. BP (BP/ LN) downgraded at Berenberg.


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  FINANCIALS: Munich Re (MUV2 GY) profits surpass targets in Q4. AXA (CS FP) FY earnings short of expectations, but raised its 2023 targets and will repurchase EUR 1.1bln of its shares. UBS (UBSG SW) is reportedly preparing to apply for a mutual-fund license in China. Lloyds (LLOY LN) launches share buyback programme of up to GBP 2bln. Group SEB (SK FP) sales and net profits decline, guides Q1 revenue lower Y/Y.


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  HEALTH CARE: EssilorLuxottica (EL FP) sales rose 9% in the quarter, affirms FY22-25 revenue margin targets. Roche (ROG SW) launches two new antibodies to identify key clinical mutations in patients with brain cancer.


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  INDUSTRIALS: There are unconfirmed reports that Qatar Holdings plans to sell 3mln shares in Vinci (DG FP) at around EUR 108.71/shr (vs EUR 109.14 close on Wednesday). BAE Systems (BAE LN) profits rise on higher military spending. Rolls-Royce (RR/ LN) tops expectations with 57% rise in profits. Eiffage (FGR FP) exec said it was open to further raising its stake in Getlink. Getlink (GET FP) sees record earnings, bosted by Eleclink and Eurotunnel traffic. Fugro (FUR NA) EBITDA beats estimates, will purchase two vessels. Knorr-Bremse (KBX GY) sales top expectations. Krones (KRN GY) sales up, backlog rises 83%. Wolters Kluwer (WKL NA) upgraded at Exane BNP. Bureau Veritas (BVI FP) sales rise 8%. Duerr (DUE GY) following record intake in 2022. said 2023 should decline somewhat.


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  MATERIALS: Anglo American (AAL LN) sales and EPS top expectations, underlying EBITDA short; takes an impairment charge of USD 1.7bln in relation to Woodsmith. Heidelberg Materials (HEI GY) sales rise, sees volatile energy and raw materials markets in 2023. Solvay (SOLB BB) Q4 ernings rise, topping expectations.


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  REAL ESTATE: Nexity (NXI FP) signs 5yr bank loan, sees 2023 sales above EUR 4.5bln. Unibail Rodamco (URW NA) upgraded at Goldman Sachs.


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  TECH: Of note for chipmakers, NVIDIA (NVDA) shares rose 8.9% post-earnings after topping expectations and announcing that it is moving faster to a “new business model” of selling AI services directly to large companies and governments. Of note for SAP (SAP GY), NVIDIA's (NVDA) new cloud service will be offered through Oracle (ORCL). ASM International (ASM NA) initiated with Buy at Citi.

23 Feb 2023 - 08:10- Research Sheet- Source: Newsquawk